MF software hears the ticking; can it beat the clock?

Multifamily software developers are racing to create new products that will carry their users into the next century.

The clock is ticking for users of multifamily software. And it's not just any timepiece, but the dreaded "century clock" that signals the end of the decade and the beginning of the next, when the last two digits on a computer's chronometer turn from "99" to "00".

"The century clock is going to force a lot of decisions for multifamily users," says Natalie Tefft, director of marketing at Dallas-based Rent Roll. "Some companies are using systems that are no longer being maintained, because the provider went out of business or decided not to make the software year-2000 aware. By necessity, companies are looking into solutions, either on their own or through their software provider."

The century clock is but one issue facing users of multifamily software. Others range from a transition from DOS to Windows and implementation of Open Data Base Connectivity to the activation of new features designed for specific niches of the real estate market.

"Because of the investment required to upgrade multiple sites, the real estate industry has been late to adopt new software technology, but now we see a hunger for new products," says Tefft.

Ron McComas, vice president of marketing at Management Reports Inc. (MRI) in Cleveland, agrees the multifamily software market is moving up fast to become leading edge. "Everyone's heading to Windows, and it's quickly being defined as a 32-bit world, with Windows 3.1 becoming a less viable alternative," he says.

McComas notes that for a typical apartment manager, the primary responsibility is to keep the project fully occupied. Hence the focus is on leasing. "Apartment owners are saying, 'I don't want an accountant at my property; I don't want an MIS person,'" McComas adds. "I want a manager who will make sure my tenants are being serviced and that I have 100% occupancy."

"In today's world, having access to information quickly is something everyone is looking for," says Robert Fahey, senior vice president of sales at Santa Barbara, Calif.-based Yardi Systems Inc. "Multifamily software today is no longer focused just on tracking tenant and accounting, today its focus is on the dissemination of all information related to properties."

Users demand simplicity Thus, the multifamily software must be simple to use while, at the same time, providing critical information. "RM Site was built to be easy to use," McComas continues. "At the start of the day, it leads the manager through a process that's very intuitive. Because the property manager typically also serves as the leasing agent, we needed to provide more than an accounting solution."

"What we're finding is that developers are looking for system integration as well as the latest technology," he explains. "They want software that takes advantage of the latest technology, like Windows 95 and Windows NT. They also want to make sure it's easy to use so they can keep their learning curve to a minimum."

Timberline recently introduced a graphical property management system that's fully integrated and provides easy access to financial and operational information. "The key to real estate investment is to have immediate access to information so you can make educated decisions," Levine says. "An automated system can track historical information and can forecast future activity."

Having this information accessible on site keeps resident retention up and maximizes operating income.

Accounting software for residential property management has been available for the last 15 years, notes Jim Heaton, vice president/marketing at Newstar Technologies Inc. of Ontario, Canada, who adds that new trends in the property management industry combined with new computer technology have resulted in many changes in the last 12 months.

"The advent of software to support maintenance activities and workflow now include automated purchase orders, preventative maintenance scheduling and equipment tracking, and it provides the residential property manager with effective tools to manage, justify and track all aspects of their operations," Heaton says.

In fact, a residential property manager with today's Windows-based software and client/server environment can even experience information overload, which is why tools are now available to sort through and provide reporting mechanisms for the property manager. "These Executive Information Systems (Asset Management) provide the infrastructure for critical management decision making right down to the individual tenant level," says Heaton.

Open Data Base Connectivity (ODBC) and ASCII text Import capabilities enable users to do this, he adds. "Multifamily software users want the ability to download the rent roll or operating expense information directly, so that the analyst does not have to retype all the data and upload the resulting cashflow valuation projections to their asset management systems," Dean says. "Argus directly links to all compliant systems through our ODBC functionality called OpenArgus or through the Import File (AIF) feature."

Argus comes with apartment modeling interfaces that specifically address and handle multifamily analysis and reporting issues. "Apartment rent rolls are different and so is the way you configure the properties," Dean says. "You don't have office suites with sq. ft. You have units of different types, different lengths of leases, different expenses such as 'make readies' (carpet, painting, etc.) every time apartments turn over."

Clients move toward Windows Still, more multifamily clients are asking for Windows, says Marc Zimmerman, sales manager for Comtronic Systems in Cle Elum, Wash., which offers Property Manager for Windows, and a lot of properties are purchasing Comtronic's software because it is Windows.

"If it makes business more efficient, they buy it," he explains. "Now Windows is much easier to sell because it allows clients to interact with other programs, send information to Excel, Lotus, Word or process spreadsheets. A lot of people already know the basics of Windows, so when they look at Property Manager, they already feel comfortable with it."

When Comtronic first came out with its Windows product three and a half years ago, interest was strong, he notes.

Customers also said they wanted multifamily software in one module rather than trying to obtain various packages, Zimmerman says. "We try to give them what they want," he adds. "We sell everything as one module. They may be strictly multifamily management now but, if someone wants them to manage an industrial complex in the future, they can with our software. They don't have to worry about buying another module."

One of the newest offerings from AVM Technology, based in Valencia, Calif., is Realwise Millennium, a Windows product for the property manager, developer or owner with accounting, management and reporting features. Steve Sturgeon, general manager, says Millennium comes in three versions: "Plus," for low volume users; "Pro," which has no limits on the volume of properties or leases; and "Standard," which enables customers to select the modules they need.

The software offers Open Data Base Connectivity and a friendly graphical interface, Sturgeon says, adding that with the Millennium SQL database, users have access to all information affecting their business. "Realwise Millennium allows you to process any information for any property or entity at any time," he says. "Consolidations for accounting or management purposes are easy to accomplish."

DOS: the alternative system While Windows is making a big splash in the multifamily market, not everyone is snapping up the product. Accordingly, a number of software developers will continue to offer DOS-based software. "Some owners are hesitant to make a large investment in hardware and software," says McComas of MRI.

Nancy Hollingsworth, vice president of advanced technology at Rent Roll, says the company has updated its DOS software to make it year-2000 compliant. "Some vendors may not even maintain DOS software, they'll move to Windows immediately because they assume users are going to like Windows better," she says. "But a lot of companies think DOS is simpler and have a preference to maintain it."

Sector segmentation poses challenges Segmentation of the multifamily industry is also posing challenges to the makers of computer software. "Many management companies are looking for a product that does it all, but specific segments of the market have specific needs," Hollingsworth adds. "We try to provide software that meets the needs of the small owner-manager as well as larger concerns with more complex needs, such as real estate investment trusts (REITs)."

For instance, some companies want software that decentralizes basic functions and vests the site with considerable control. Others look for software that allows them to maintain control at the corporate level. Either way, managers and investors demand sophisticated reporting tools for evaluating net operating income, cashflow, rate of return, dividends to investors and so forth, she says.

McComas of MRI agrees that the multifamily industry is experiencing an increase in consolidations, particularly through REITs. "Apartment communities are being merged to form larger entities, and that means higher demand for home-office functionality," he says. "We'll see more sophisticated software requirements at the home office and probably at the site."

Internet provides new solutions What's in store in the months ahead for multifamily software? The Net, for one.

"The next few years will see the Internet and intranets playing an increasing role in the processing of information for the multifamily industry," says Yardi's Fahey. "Advantage 97 is the first intranet solution that enables the dissemination of information form site to home office using browser technology. Using browser technology has allowed Yardi Systems to provide this in a simple to use and affordable package."

"The Internet now provides the residential property manager with an effective and low-cost communication solution for their remote buildings," says Newstar's Heaton.

Several large companies have expressed interest in outsourcing portions of their operations, adds Rent Roll's Hollingsworth. "It might make sense for them, since there are opportunities to reduce costs. They wouldn't have to buy as many servers or maintain their software and databases. We would do it for them. Some companies are even asking about doing it over the Internet."

Chicago-based Visual Properties is even offering software and technology to allow managers and owners of multifamily housing to market properties through cyberspace.

"It's designed to allow anyone to use it to search for an apartment in any city," says Bruce Mitchell, executive vice president of corporate development. "It's the only way to reach a qualified national audience cost-effectively."

Mitchell notes that in the past, multifamily managers have relied on the local print media for their marketing, including regional apartment guides. "We created interactive technology tested by serving over 20,000 individuals in their search for an apartment," he says. "Using apartmentsplus.com, the apartment seeker designs a search based on their personal criteria -- the area they want to live in, the size of the apartment, the amenities of the apartment, etc. The apartment seeker then takes a total virtual tour of the apartments that meet their needs."

Visual Properties does all the production work and manages the data, Mitchell adds. "Historically, we've only been in Chicago," he says, "but we're rolling out nationally, getting property management firms across the country to sign up."

Visual Properties has also formed an alliance with the city of Chicago to create an on-line interactive apartment referral service, Affordable Apartments of Chicago. This service helps low- and moderate-income individuals locate housing that meets their needs and provides a cost-effective marketing vehicle for affordable housing developers. Affordable Apartments for Chicago will be launched in the next few weeks and available through the Chicago Department of Housing.

Developers enhance product Even without the Internet, clients will have more and more demands for features and functionality, so software developers will be constantly enhancing their products says Timberline's Levine. "One of the things we've found in our research is that current systems are either unit-based or resident-based. We found a need for lease-based software. You may have one lease for one resident in a unit, or one lease for two residents in a unit or two leases for two residents in a unit. We modified our program to accommodate intricate multiple-leases scenarios like these."

Whatever new bells and whistles that will be offered in the future depend on what direction software giant Microsoft Corp. takes, says Zimmerman of Comtronic Systems. "Some things we're looking at now include imaging options so a customer can include a picture of the units during the sale process, keep records of damage or scan in photos of floorplans. As storage space becomes more affordable and more compressed, users can store more data in our multifamily software system."

All that can be said now is that, with the clock ticking, the world of multifamily software will never be the same again.

Mike Sheridan is a Houston-based writer who contributes to a number of national publications.